token of my sincere respect and immense love for them.
Note on transliteration

Transliterations of Persian words follow a modiÔ¬Āed version of the
transliteration system used by the International Journal of Middle East
Studies. For simplicity no diacritical marks are used except for the ayn
(‚Ä˜), and in order to render words as they are pronounced in Persian,
short vowels follow Persian rather than Arabic pronunciation (e.g. ‚Ä˜‚Ä˜e‚Ä™‚Ä™
instead of ‚Ä˜‚Ä˜i‚Ä™‚Ä™ and ‚Ä˜‚Ä˜o‚Ä™‚Ä™ instead of ‚Ä˜‚Ä˜u‚Ä™‚Ä™). Common names and terms,
such as Khomeini, Koran, and Shiite, follow their established English
spellings.

xiii
Map of Iran

Source: This map was adapted from a map courtesy of the General
Libraries, The university of Texas at Austin.
1 The puzzle of the Tehran Bazaar under the
Pahlavi monarchy and the Islamic Republic

We have a saying, ‚Ä˜‚Ä˜There is one Iran and one Tehran and only one Sara-ye
Amin (Amin Caravanserai),‚Ä™‚Ä™1 meaning that anything that happens in Iran
can be captured right here in the Tehran Bazaar.
Fabric wholesaler in the Amin Caravanserai, Tehran Bazaar

A year after his fall from power, Mohammad Reza Pahlavi, the last Shah
of Iran, recalled, ‚Ä˜‚Ä˜I could not stop building supermarkets. I wanted a
modern country. Moving against the bazaars was typical of the political
and social risks I had to take in my drive for modernization.‚Ä™‚Ä™2 Mean-
while, three years after the establishment of the Islamic Republic,
Ayatollah Ruhollah Khomeini stressed that ‚Ä˜‚Ä˜We [the Islamic Republic]
must preserve the bazaar with all our might; in return the bazaar must
preserve the government.‚Ä™‚Ä™3 Given this drastic change in the state‚Ä™s
outlook toward the bazaar, it is not surprising that the Tehran Bazaar
had radically different experiences under these regimes. What is star-
tling, however, is that the transformation is not as we would expect ‚Ä“ the
Bazaar survived and remained autonomous under the modernizing
Pahlavi regime (in fact so much so that it was one of the leading actors in
the Revolution), while it was radically restructured and weakened under
the unabashedly ‚Ä˜‚Ä˜traditionalist‚Ä™‚Ä™ Islamic Republic.
By comparing how the last Shah of Iran sought to ‚Ä˜‚Ä˜move against the
bazaar‚Ä™‚Ä™ and how the founder of the Islamic Republic ‚Ä˜‚Ä˜preserve[d] the
bazaar,‚Ä™‚Ä™ it will be the burden of this book to depict these outcomes and
to examine why they followed these counterintuitive trajectories. The
Pahlavi regime‚Ä™s policies during the 1960s and 1970s did not dismantle the
Tehran Bazaar‚Ä™s economic institutions; the modernization scheme formed
an autonomous setting for members of the Bazaar, or bazaaris, to regulate
their economic lives and prosper. Conversely, while many individual
merchants may have prospered, the Islamic Republic‚Ä™s policies radically

1
The Amin Sara is one of the main caravanserais in the Tehran Bazaar.
2
Mohammad Reza Pahlavi, Answer to History (New York: Stein and Day, 1980), p. 156.
3
Asnaf no. 22 (Ordibehesht 1373 [May 1992]), 47. This statement was made in 1982.

1
2 Bazaar and State in Iran

altered relations within the Bazaar, altered its institutions (i.e. laws and
policies), and reduced its capacity to mobilize against the state. The irony
is that while the overthrow of the monarchy was in large part a response to
the exclusionary and clientilistic practices that alienated groups such as the
Bazaar (along with the working class, the middle class, the clergy, and the
urban poor), large segments of the very same social classes that it professed
to champion are currently discontent and politically dislocated.
This is why today if you talk to bazaaris, you hear statements such as
the one made by Hajj Akbar, a carpet wholesaler in the Tehran Bazaar.
When I told him that I had come to Iran to analyze the Tehran Bazaar,
Hajj Akbar, probably in his sixties and not one to mince words,
responded, ‚Ä˜‚Ä˜You mean this Bazaar? This Bazaar doesn‚Ä™t need any
analysis. It doesn‚Ä™t even exist any more; it‚Ä™s dead!‚Ä™‚Ä™ During the course of
my research I discovered that when bazaaris mention that the Bazaar has
‚Ä˜‚Ä˜died‚Ä™‚Ä™ or ‚Ä˜‚Ä˜changed‚Ä™‚Ä™ or ‚Ä˜‚Ä˜is not like the past,‚Ä™‚Ä™ they are referring to its
restructuring and political marginalization.
Transformation and change are essential both to politics and to the
study of politics. Political activists and normative thinkers have ima-
gined and acted on their impulse to better the world around them by
transforming the minds of the people who inhabit it and the rules that
govern it. Within the social sciences, change forces observers to critically
appraise the relationships between various factors comprising complex
societies and polities in order to identify the forces behind this trans-
formation. Once change is detected, observers are invited to question
how and why it transpired. Scholars must move beyond labeling and
categorizing objects in order to contemplate what leads to abrupt
reconÔ¬Āgurations or gradual evolutions away from particular constella-
tions and social forms. Consequently, the reconÔ¬Āguration of Iran‚Ä™s state
and the reÔ¬Āguring of the Bazaar, as sensed by Hajj Akbar, are the
wellspring of this book. Thus, I ask: How and why has the Tehran
Bazaar had such disparate and counterintuitive experiences under these
two regimes? More precisely, why was the Pahlavi monarchy, a regime
that was openly hostile toward bazaars as a group and an institution,
unable to restructure the Bazaar? Conversely, why was it that since the
establishment of the Islamic Republic, a regime that came to power with
the support of bazaaris and with the speciÔ¬Āc mandate to preserve
‚Ä˜‚Ä˜indigenous and Islamic‚Ä™‚Ä™ institutions, state policies have unwittingly
reconÔ¬Āgured the organization of the Bazaar‚Ä™s value chains (i.e. com-
mercial networks tying together import‚Ä“exporters, wholesalers, and
retailers) and their position in the political economy? And Ô¬Ānally, what
political impact did these transformations have on the Bazaar‚Ä™s capacity
to make claims against the state? Since Tehran‚Ä™s central marketplace is
The puzzle of the Tehran Bazaar under two regimes 3

an economically powerful and potentially politically potent group, the
experience of this social microcosm under these two regimes reÔ¬‚ects the
larger dynamics of state‚Ä“society relations and forces of social change and
continuity over the past four decades.
To foreshadow the arguments of the book, I contend that the two
regimes, varying in terms of their development policies and their nor-
mative agendas, led to different incorporation strategies, which reshaped
the institutional setting and physical location of the networks that
constitute the organization of the Tehran Bazaar and engender its
commonly noted capacity to mobilize. In the case of the Pahlavi mon-
archy, the regime followed high modernism that tended to downgrade
the state‚Ä™s incorporation of the Bazaar.4 This approach fostered the
Bazaar‚Ä™s autonomy and a concentration of commercial value chains
within the physical conÔ¬Ānes of the marketplace. Under the Islamic
Republic‚Ä™s populist transformative agenda, the state was caught within a
complex matrix of objectives and agendas, which resulted in the
incorporation of bazaaris as individuals and the cooptation, regulation,
and reterritorialization of commercial value chains physically dispersed
beyond the Bazaar. In the former case relations in the Bazaar constituted
a series of cooperative hierarchies (long-term, multifaceted, and cross-
cutting ties) fostering a great sense of group solidarity despite differences
in economic power, social status, and political proclivities. In the latter
period this mode of coordinating actions and distributing resources and
authority, or what I term ‚Ä˜‚Ä˜form of governance,‚Ä™‚Ä™ was transformed into
coercive hierarchies (more short-term, single-faceted, and fragmented
vertical relations) with a diminished sense of collective solidarity.
Finally, this shift from cooperative to coercive hierarchies limited the
Tehran Bazaar‚Ä™s capacity to mobilize against the state and explains its
relative quietism since the Revolution. This study reminds us that state
policies and institutions shape social cleavages, empower and constrain
political organizations, and restructure socioeconomic relations; how-
ever, they often do so in indirect and unforeseen ways. In fact, these
outcomes may go so far as to undermine the political agendas of those
rulers and policymakers who initiated these programs in the Ô¬Ārst place.

4
By ‚Ä˜‚Ä˜state incorporation,‚Ä™‚Ä™ I am referring to the Colliers‚Ä™ concept of the legal and
bureaucratic mobilization and control of a social group (in their case labor, and in mine
the bazaar) with the goal of repressing and depoliticizing that group. Ruth Barins Collier
and David Collier, Shaping the Political Arena: Critical Junctures, Labor Movement, and
Regime Dynamics in Latin America (Princeton: Princeton University Press, 1991). On
political incorporation of economic elites see David Waldner, State Building and Late
Development (Ithaca: Cornell University Press, 1999).
4 Bazaar and State in Iran

Continuity, revolution, and state‚Ä“society relations
The Pahlavi monarchy and the Islamic Republic differ on many fronts:
foreign policy, social agendas, ideological sources to legitimate their
rule, and state relations with the religious establishment, to name just
the most obvious. However, they share important similarities in method
of rule, socioeconomic trends, and position in the world economy. In
the words of one scholar:
[L]ike the Shah the ruling Muslim fundamentalists are trying to preserve their
dictatorial regime by resorting to the suppression, imprisonment, and execution
of their political opponents and are quite prepared to rule by terror. Just as the
Shah tried to foster the idea that loyalty to the monarchy and national patriotism
were the same, Khumayni has been adamant about the view that loyalty to the
Velayat-i-Fagih and Islam are identical. Any opposition to Khumayni as the
Fagih (just jurist) or his regime is regarded as anti-Islamic in the same way that
opposition to the Shah used to be treated by the old regime as unpatriotic and
treasonous. The state-owned propaganda networks have been used by the
Islamic regime to develop and sustain the ‚Ä˜‚Ä˜cult of personality‚Ä™‚Ä™ and charismatic
leadership around Khumayni in much the same way as was done for the Shah
under the monarchy. Dictatorship, either in the form of the Shah‚Ä™s patrimonial
system or Khumayni‚Ä™s government of theologians, when combined with oil
wealth, is most likely to create and perpetuate the system of dependent capit-
alism which possesses all the evils and very few of the alleged beneÔ¬Āts of a
competitive market economy.5
Furthermore, both regimes have highly transformative programs. The
Shah was an arch-proponent of developmental planning, what David
Harvey refers to as ‚Ä˜‚Ä˜high modernism.‚Ä™‚Ä™6 He set out to transform Iran
into a ‚Ä˜‚Ä˜modern‚Ä™‚Ä™ industrial power by implementing a stylized and linear
developmental model of Western industrialization and social moder-
nization. In part as a response to what many viewed as the blind imi-
¬ī
tation and idealization of the Western model by the ancien regime, the
Islamic Republic has sought to establish an independent and econom-
ically self-sufÔ¬Ācient society ‚Ä“ a society, moreover, that abides by the
principles and laws of Islam. This Islamic model, however, was strongly
aligned with a populism that combined the radical language of anti-
imperialism and egalitarianism borrowed from secular and religious
Leftism.7 These two projects have radically different objectives, yet they

5
M. H. Pesaran, ‚Ä˜‚Ä˜The System of Dependent Capitalism in Pre- and Post-Revolutionary
Iran,‚Ä™‚Ä™ International Journal of Middle East Studies 14 (1982), 518‚Ä“19.
6
David Harvey, The Conditions of Post-Modernity: An Enquiry into the Origin of Social
Change (Oxford: Basil Blackwell, 1989).
7
Ervand Abrahamian, Khomeinism: Essays on the Islamic Republic (London: I. B.
Tauris & Co., 1993); and Val Moghadam, ‚Ä˜‚Ä˜Islamic Populism, Class and Gender in
The puzzle of the Tehran Bazaar under two regimes 5

share the belief that the state is a force that can, and indeed should,
engineer a new society ‚Ä“ a ‚Ä˜‚Ä˜modern‚Ä™‚Ä™ and ‚Ä˜‚Ä˜Islamic‚Ä™‚Ä™ society respectively.
As referred to in the quote above, the two regimes also share the quality
of being oil exporters, which bestows on both the imperial and the
revolutionary state a high level of autonomy from social forces. With oil
revenues Ô¬‚owing directly to the state, this factor allowed these regimes
to remain Ô¬Ānancially independent from domestic social groups.8
Therefore, the Tehran Bazaar, as one of the foremost economic insti-
tutions in Iran, was susceptible to the transformative demands of these
state agendas.
In addition, as in most developing countries, in the past half-century,
Iran‚Ä™s demographic and socioeconomic variables have gone through
dramatic changes. The level of urbanization and rates of literacy have
increased and the relative share of the agricultural sector and the per-
vasiveness of ascribed identities (e.g. tribal, kinship, and ethnic iden-
tities) have waned. Yet these changes began in the Ô¬Ārst half of the
twentieth century and have generally exhibited the same fundamental
trends and pace during the past seventy years. Representing various
indicators of urbanization, literacy, industrialization, and modern
banking and education, Figures 1.1, 1.2, 1.3, 1.4, and 1.5 show that
these trends began decades before the 1970s and that there is no dra-
matic escalation or shift in these indexes after 1979. Thus, the socio-
economic transformations in and of themselves cannot explain changes
in the structure of the Bazaar across these two regimes or the particular
timing of this rupture after the Islamic Revolution.
Therefore, this project investigates the transformative agendas of
states by focusing on the variations between the Pahlavi monarchy and
the Islamic Republic and their relationship to a particular physical
space, economic form, and social class ‚Ä“ the Tehran Bazaar. The ana-
lysis, therefore, will move back and forth between the caravanserais of
the Bazaar and the ministries of the government, to emphasize the
interaction between state and Bazaar. And, in a larger sense, I shed light
on state‚Ä“society relations under the two regimes.
Marketplaces are important institutions in Middle Eastern and North
African societies for a number of reasons. Bazaars and suqs are an
economic focal point where both retail and wholesale commerce takes
place and large sums of credit circulate among members of the private

Postrevolutionary Iran,‚Ä™‚Ä™ in A Century of Revolution: Social Movements in Iran, ed. John
Foran (Minneapolis: University of Minnesota Press, 1994).
8
Hootan Shambayati, ‚Ä˜‚Ä˜The Rentier State, Interest Groups, and the Paradox of
Autonomy: State and Business in Turkey and Iran,‚Ä™‚Ä™ Comparative Politics 26 (April
1994), 307‚Ä“31.
6 Bazaar and State in Iran